Monday, September 23, 2013

Why have I not been blogging?

Every time, I have to learn something new, it excites me - however, in the last 1 month I obviously have to learn fast on something I do not know and it is now part of my job. I have to focus on something else which is not stocks although it allows me to follow up on some companies which I have not been following most of the time.

Anyway, over that period, the market have been very volatile - CI dropping to almost 1700 and now it is hovering around 1800 points. Over that last one month as well, I have been travelling locally, and I have been trying on all the local flight operators - Airasia, Malindo, MAS, Firefly. The only one which I have not taken is probably Berjaya Air. That experience caused me to probably now change some of my perception over how I perceived Airasia to be. It is facing some really tough competition as some other players are really trying hard. Malindo for example - the one flying off from KLIA has a whole new fleet of new planes and nicer too. Prices are now much much more competitive - to the benefit of consumers and now we have the choice of better facilities provided in an airplane as compared to the one provided by Airasia.

For a while as a Malaysian, I am really spoilt for choice as I can decide to either stop at Subang (Firefly, Malindo) or KLIA (Malindo, MAS) or Airasia through LCCT and they are really affordable. The only other thing which I faced though is that MAS' flight was late 3 out of 4 times. I guess somethings may never change.All these will augur well for Malaysia Airport.

On other stuffs, results from many of my portfolio seems to be decent. I felt that DKSH, NTPM, Padini, Jobstreet seems to be doing well except for Parkson. Frankly, at this point of time, I am very comfortable with the list of companies in the portfolio - which is also why I have not been posting much. Ya, running out of stocks for the moment. The good thing for me is that the ones which I have been buying and following have not performed that well in terms of price - i.e. Padini and Keuro. Does that mean locking up more of those?

26 comments:

I've heard similar comments about Malindo as well. Seems like AA's got real competition now. Doesn't take away the fact that Lion Air's got a bad safety record but I doubt many consumers will take that into consideration when choosing which to fly with.

Malindo is superb in customer servicing. I encountered some problems in online booking, in which I subsequently made complaints to both the Facebook page and tele-customer service department, both responded promptly and effectively.

I guess that is why AA has been very active in replying its Facebook queries nowadays. They didn't give a shit previously.

Fare wise, indeed it is very competitive. When comes to travelling next time, my first click would be on Malindo.

Share price of DKSH is doing very well. They seems to be an active effort within DKSH to liduidate inactive assets to raise cash to reduce borrowing. Finance cost is reducing. Coupling with steady revenue, EPS is growing well.

DKSH could be fetching valuation of AMWAY if they are willing to be more aggressive with their DIVIDEN.

Even if YTLP trade above RM 2.00, it just show it recover to 2 year ago level only.

YTLP stand to recover back from slump 2 year ago due to loss in Wimax as all its division are showing much more improvement now, and very probable breakeven of its main culprit Yes Wimax pull up by contribution from completed 1Bestarinet

I think YES would probably not causes that much losses to YTL Power in the future. However, I still have doubts over the WIMAX technology in the long run. If LTE is deployed widely by the larger telcos, YES will be in trouble.

In US, where access was a problem especially when smart phones was a hit 5 years ago, today they are solving the problem using LTE technology and apparently more than 60% are covered with LTE. Having used LTE, it seems that the access speed is really fast with download up to 20MB. With that all the WIMAX providers will be in real trouble.

The discount gap between YTLP and WB is getting even widen now. However so far, not many have opt for warrant conversion. This could be due to despite YTLP-WB perform less in turn of absolute amount and is at discount now, but in turn of % gain, it still outperform its mum share. Therefore, don't it have additional benefit if opt for conversion, by paying RM 1.21, instead should have more edge if use that amount to buy more WB, after all, WB still have 5 year tenure of life

I think YTLP aggressive buyback have attract market attention now, more fund are willing to capitalize on uptrend stock. If these fund especially EPF know that if they keep selling, it just transferring more share to YTLP share buyback and never ever they can buyback later on weakness as these buyback share will keep in its treasury stock and later could opt for second round of cancellation.

These fund must now known that its one way direction, only have accumulation but not distribution back. EPF and those keen seller will need to think twice before selling more YTLP share into market.

However, in stock market, there is endless possibility, like expected privatization call-off; stop share buyback etc....I still will hold YTLP until its Q1 result release in Nov, as my wish to see Yes Wimax turnaround remain + strengthen in UK pound (Wesses Water)/Aussie dollar (ElectroNet)/Sing dollar (Power Seraya)/US dollar (PT Jawa), should record highest EPF in Q1 result. Expect YTLP to record 5sen EPS in Q1, and annualized 20sen, share price trading at PE 10x should offer fundamental support for YTLP to trade above RM 2.00

You have been aggressively promoting YTLP. Your enthusiasm is remarkable, but with all due respect, I would like to argue on several points:

1) I am getting less convinced on the whether the privatization will happen or not. The shares bottomed at RM1.40 few months ago and rallied to RM1.80 as at writing. That is almost RM3 billion worth of capitalization (awful a lot of money). If YTL really wanted to take YTLP private, why didn't they do it earlier at lower price? Assuming they need to pay another premium on top of RM1.80, they need to fork out more hundreds of millions (if not billion), be it in shares or cash. I don't think Yeoh family is that unintelligent.

2) I view YTLP more as a long-term value buy rather than a short-term event buy. I have high respect to the Yeohs' acquisition skills, and YTLP has a group of assets that are very valuable and cash-generating. It is only a matter of time for the shares to go RM2 or even RM3. I guess the catalyst will be a new Buffett-like acquisition. RM10 billion cash sitting in the balance sheet without generating anything, is not awesome.

3) Overall, I agree with you that YTLP is a make-sense investment, but definitely not for short-term speculation. I may be wrong, maybe the privatization is to be rolled out soon, but I will have no regret anyway for missing it out for privatization reason.

First of all, there is fundamental change in YTLP in which its share buyback, accumulate til 3.5%, and cancelled 3.4% in Aug and share buyback again, accumulating so far till 1.47% and will likely keep accumulate till its reach more than 3.5% again and opt for second round of cancellation.

The impact is reduce total number of share in YTLP to pave way for privaztion. As privatization is through major shareholder either via share swap with YTLcorp, selective capital repayment or combination of share swap + cash offer, the reduce number of YTLP due to cancellation of treasury share translating to less capital outlay/ less dilution interest from major shareholder.

You can argue as why privaztion didn't take place when share trade at lowest level. But does, current share price deem to be expensive? Bear in mind, current YTLP share price is slump from 2 year ago when it start recognized loss making Yes-Wimax, from RM 2.20 uptrend till now. Current share uptrend is just consider recovery back to 2 year ago level. With completion of huge capex 1BesteriNet ahead of schedule on 16 Sept, 1Bestarinet will just about to contribute earning to YTLP bottom line, with just management and maintenance cost alone, YTLP is able to recognized RM 262.8m pa.

Coming from the telco background, let me just say, WIMAX is a dying technology. Big western vendors never invested on WImax or have sold off their business. Its primaryly supported by niche vendors and the Huawei. For more telcos who had wimax before, all have switched off gradually and moved to LTE.

WIMAX is simply not a sustainable or a network technology with long term view. Huawei strategically went into it knowing it will give them an option to swap out to LTE where they want to have a larger market share then world leader Ericsson.

However, most of Huawei's conversion as i have seen are zero cost, it was an easy way to buy into LTE without competing on tenders.

This is the fact. Unless YTL moves into LTE, its death sooner or later. Finally, with so many LTE players, plus someone coming in soon on the 850 Band (you figure who that is) and another one lobbying for the 700 band LTE, you will have 2 players who will be well positioned for a cheaper entry cost for LTE, alongside the big telco's running the 2600Mhz. spectrum

Even our Telco's are mad and upset that an 850Mhz player will coming in and potentially a 700Mhz.

So in essence, we'll be flooded enough on LTE with coverage, bandwidth and cheaper prices and better spread of equipment then WIMAX.

WiMAX and LTE share most of the RAN and core network, so the transition path to LTE will be smoother than, for instance, the transition path from HSPA to LTE. The trends towards RAN-agnostic base station platforms that can accommodate multiple wireless interfaces and towards user devices that support multiple interfaces further facilitate this transition.

I have a telco background too and I agree with goks. WIMAX is glorified WIFI and LTE just blows it out of the water. Anyone basing their hopes on YES making a turnaround is grasping for straws. Without device manufacturer support and inferior performance compared to LTE its not viable from day one.

In the end what matters the most is who gets the LTE license from MCMC. Now that's money.

It will tough for YES. Like I said before, it would be good enough if it manages to breakeven moving forward as the competition through LTE is more even now with the larger telcos having some of the spectrum.

I also thought that I read at one point of time YTL is supposed to get the 850 band. What happened to that? Now, the Syed guy?

He will not be able to do anything with it except selling it or trade with the biggest bidder.

Anyway, back to YTL, I think it will do well with the other businesses but not from telco business. There are businesses which are more attractive though - to me.

Not able divulge much, 850 is not for Tan Sri. It's for a someone who already used this spectrum before. Imho Tan Sri has other plans depending If he gets the DTT license. Let's not forget, behind all this telco crap, Malaysia is pgoing DTT, committed to ASEAN analogue switch off by 2020 for broadcast. Only 3 bidders left in the game, results are supposed to be out in q4. Puncak is one of them, you cann google it.

However it's unclear how the licensor will monetize the DTT operations license without further government funding or some kind of barter trade :). A hybrid paytv and DTT is possible but that market is crowded with tm and astro fighting. Content cost will be high for a new comer. So they need to find other ways to fund DTT.

Let's not forget, the lte band at 850 or 700 is worth easily $200 to $300m in savings and DTT in Malaysia I estimate will cost roughly 80 to 100musd to establish.

I'm afraid i'm not very familiar with your story on smother transition from WIMAX to LTE.

To begin with, only 1 (or 2) vendors offer this, its Huawei for sure and possible ZTE. Secondly, WIMAX and LTE are not even part of the communications initiative, it was 2 opposing groups trying to gain acceptance for being tagged as 4G.

Even in the same evoltuion, there is NO common core between 3G and LTE. your 3G voice and packet core remains the same and you have an LTE core with evolve packet gateways. There is no vendor who has a common packet core for LTE and pre-LTE. let alone a WIMAX+LTE core.I have studied 2 WIMAX swap out while i was in middle eats till last year, one in Saudi & Oman, by the same vendor, huawei. In both cases, it was swapped into a brand new LTE core.

On the RAN side, there is a single RAN concept, though i have not seen WIMAX in the same single RAN technology as 2G,3g + lte. So these must be really new technologies.

Last but not least, given TD-LTE is pretty much chinese LTE, very few counties have adopted it. So you're dependant on few vendors for chipset. most who looked at TD-LTE will probably opt for LTE Advance coming in ayear or 2 as next step of LTE.

So to be honest, unless YTL can get some LTE license or spectrum, YES os pretty much cornered.

Market surprised that new entrant gains largest allocation, with 40MHz of bandwidth in the 2.6GHz band

By CAROLINE GABRIEL

Published: 7 December, 2012

READ MORE: Spectrum | Malaysia | Regulator | LTE

Malaysia is set to be one of the major mobile broadband growth markets in the second half of the decade, but has so far lagged behind some countries in the region because of regulatory delays and disputes. However, the MCMC (Malaysian Communications and Multimedia Commission) has now made a significant step forward, awarding 2.6GHz licences to eight operators, including a new entrant, for LTE services.

The winning operators are Maxis, Axiata, DiGi, P1, REDtone Marketing, U Mobile, YTL and newcomer Puncak Semangat. The existing players are a mixture of conventional 2G/3G cellcos, and wireless broadband carriers which have previously invested in WiMAX, often in the 2.3GHz band "bring fresh ideas and innovations to the market", though some question whether there are now too many operators to allow for profitable 4G competition.

Local analysts from CIMB Research questioned the decision to allocate the largest block of spectrum, at 40MHz, to Puncak Semangat. The regulator said it made the generous award because it was impressed by the firm's business plan, but without any 2G or 3G coverage the company will be confined to localized or fixed data-only services for a while, or will need to rely on roaming or MVNO deals with rivals to gain full coverage.

P1 Networks, established as a WiMAX player and also a device maker, gain TDD spectrum which will complement its existing capacity and aid WiMAX migration. CEO Michael Lai said in an interview that his firm was "thrilled to have been granted access to 20MHz of 2.6GHz TD spectrum andexcited to be able to offer this next generation of 4G technology to Malaysians."

Wing Lee, CEO of Malaysian communications provider YTL is speaking on the subject of Managed Service and Cloud Platforms on Day Two of the LTE LTE Asia conference taking place on the 18th-19th September 2013 at the Suntec, Singapore. Ahead of the show we speak to him about the state of YTL’s 4G networks and Lee’s view on TD-LTE technology.

What the current situation with regards LTE in terms of spectrum allocation and launch plans?

We have been a good steward of the spectrum allocated to us by the government and have used that to build the largest 4G footprint in Malaysia. With the addition of LTE to our 4G network, that will only serve to give us additional competitive advantage. We are actively working toward that and will be ready to make announcements when the time is right. Granted, having more spectrum allocation will only enable us to do more for the benefit of our customers.

What are your thoughts on the current state of the TD-LTE eco-system?

We like TD spectrum as it is more flexible and efficient compared to FD spectrum and we are particularly pleased that our spectrum holding positions us very well for that. We think TD-LTE is tracking to be an important global standard. With China and India both preparing toward TD-LTE launches, we believe the ecosystem for TD-LTE will soon cross the tipping point.

Disclaimer

The content here should serve as the opinion of the writer rather than as an advice to buy or sell. You should do your own research and/or seek expert's advice when doing your investments. Any decision that you made is your own and the author should not be held accountable.